Ford’s good problem: making enough small cars

Automaker has no plans for additional plant closings

Ford sold 30,000 Focus sedans in May and now sales are outstripping manufacturing capacity.
DETROIT -- Ford Motor Co. is mulling its options on how to make enough small cars to meet customer demand. Those options include adding more shifts or speeding up production lines.

It’s a good problem for the No. 2 U.S. automaker as it prepares for major cutbacks in truck production. Driven by a doubling in U.S. gasoline prices over the last few years, pickup truck and SUV sales fell by 11.1 percent during the first four months of this year compared with the same period a year ago. Truck sales will fall even more in May.

But sales of the Ford Focus in May will come in at more than 30,000, said Joe Hinrichs, Ford group vice president of global manufacturing. Ford sold about 24,000 of the small cars in April.

The problem: Ford’s Focus assembly plant in Wayne, Mich., has capacity of about 230,000 vehicles annually. If market demand for the Focus keeps up, Ford would need to produce about 360,000 of the car per year.

Hinrichs on Friday gave a group of reporters the early glimpse of Ford’s sales figures for the month of May from the Wayne plant in suburban Detroit. He wouldn’t say whether Ford would add a third shift at the plant, or if any of Ford’s five plants that are cutting back on production of SUVs and trucks might be converted for car production.

“The market’s moving so fast in the last couple months that everyone’s hesitant to make any declaration of any sort,” Hinrichs said. “Two months ago, we didn’t think that truck sales would be where they are today. They declined at a rate that’s far faster than we expected.”

Ford’s truck sales fell 18.2 percent in May.

Hinrichs remarks come a week after Ford CEO Alan Mulally said meeting the shift of consumer demand away from trucks and SUVs and toward small cars and crossovers is a challenge affecting the entire industry. Mulally said the tipping point was $3.50-per-gallon gasoline. Prices now have topped $4 in some markets.

“If the market changes in a dramatic fashion -- and it is -- we have to continue to re-evaluate and look at what our options are,” Hinrichs said.

Ford didn’t prioritize cars as much as it should have. But Ford will move as fast as it can, he said. The other challenge will be predicting where demand for trucks and SUVs will shake out.

“You have to be very careful, because there’s a fine line between having one too few and one too many” plants producing a vehicle, Hinrichs said. “That’s the art and science of what we do.”

No more plant closings

Meanwhile, Hinrichs said Ford has no plans at for further U.S. plant closures despite a dramatic drop in demand for pickup trucks and SUVs.

The company, he said, plans to honor a commitment to the UAW during contract talks last year not to close more plants.

"There's no plans right now to do anything different than we committed to," he said.

Hinrichs also said the company plans to offer more buyout and early retirement packages on a plant-by-plant basis as it tries to further reduce its hourly work force to match lower demand for its products.

The Associated Press contributed to this report

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